Honda Motor Co. is anticipating a significant 59% decline in operating profit for the fiscal year ending March 31, 2026, as global trade tensions—particularly new U.S. tariffs—put pressure on the automotive industry. The company now expects to post an operating income of 500 billion yen (approximately $3.38 billion), down sharply from 1.21 trillion yen recorded in the previous fiscal year.

This projection highlights the challenges automakers face amid escalating tariffs on imported vehicles, while also contending with growing competition from Chinese electric vehicle manufacturers.

As part of a strategic reassessment, Honda announced it is postponing its previously unveiled plan to develop an electric vehicle supply chain in Ontario, Canada. The delay, expected to last around two years, comes in response to slowing global demand for EVs.

Meanwhile, merger talks between Honda and Nissan earlier this year ended without a deal, although the two companies remain in a cooperative partnership focused on technology development. Honda CEO Toshihiro Mibe emphasized the importance of such alliances, stating the company remains open to strategic collaborations to adapt to ongoing industry challenges.

Tariff-related costs are expected to reduce Honda’s operating profit by around 650 billion yen in fiscal 2026, with roughly 300 billion yen of that tied to import duties on approximately 550,000 completed vehicles. The company said it aims to offset about 200 billion yen of these losses through various countermeasures.